TPOB.L Regulatory News (TPOB)

12 October 2020

Triple Point VCT 2011 plc

(the "Company")

RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2020

The Directors of Triple Point VCT 2011 plc are pleased to announce the unaudited results for the six months ended 31 August 2020.

You may view the Interim Report in due course on the Triple Point website: www.triplepoint.co.uk. Please note that page numbers in this announcement are in reference to the Interim Report.

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

The Company's LEI is 213800AOOAQA5XQDEA89

Further information on the Company can be found on its website https://www.triplepoint.co.uk/current-vcts/triple-point-vct-2011-plc/s2539/.

NOTES:

The Company is a Venture Capital Trust incorporated in July 2010. The Investment Manager is Triple Point Investment Management LLP. The Company was established to fund small and medium sized enterprises (SMEs). The Company launched a new share class, known as The Venture Fund, in March 2019 which is mandated to invest in SMEs producing products or digital services that solve challenges faced by their larger corporate customers.

Financial Summary

Triple Point VCT 2011 plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM" and "Triple Point"). The Company was incorporated in July 2010.

· A Ordinary Shares ("A Shares"): On 30 April 2015 the A Share Class offer closed having raised £10.3 million with a total of 9,951,133 A Shares being issued.

· B Ordinary Shares ("B Shares"): On 29 April 2016 the B Share Class offer closed having raised £6.97 million with a total of 6,824,266 B Shares being issued.

· Venture Shares ("Venture Fund"): On 31 July 2020 the second Venture Fund offer closed having raised gross proceeds of £5.8 million with a total of 5,853,393 Venture Shares being issued. This takes gross proceeds raised to £12.7 million and 12,544,922 Venture Shares have now been issued.

Key Highlights

· A Shares Cumulative Dividends Paid: 70.00p (a dividend of 6.75 pence per A Share was paid on 30 June 2020).

· B Shares Cumulative Dividends Paid: 10.00p (a dividend of 5.00 pence per B Share was paid on 30 June 2020).

· Venture Shares Cumulative Dividends Paid: 3.00p (a dividend of 3.00 pence per Venture Share was paid on 31 July 2020).

· Total Return per A Share*: 121.79p (Total Return for the A Share Class was 121.79 pence per share, which includes cumulative dividends paid of 70 pence per A share).

· Total Return per B Share*: 107.13p (Total Return for the B Share Class was 107.13 pence per share, which includes cumulative dividends paid of 10.00 pence per B share).

· Total Return per Venture Share *: 92.54p (Total Return for the Venture Share Class was 92.54 pence per share, which includes cumulative dividends paid of 3.00 pence per Venture share).

· Fundraising: £5.8m (the Venture Fund offer which closed on 31 July 2020 raised proceeds of £5.8 million.)

\* Total Return is made up by current Net Asset Value plus Dividends paid to date. Total Return is defined as an Alternative Performance Measure ("APM"). Total Return, calculated by reference to the cumulative dividends paid plus net asset value (excluding tax reliefs received by shareholders), is the primary measure of performance in the VCT industry.

Chairman's Statement

I am writing to present the Interim Report for the Company for the period ended 31 August 2020.

The COVID-19 global pandemic has presented a wide-ranging set of challenges that span public policy and economics to mention a few. Each one has been, and continues to be, extraordinary in both complexity and impact.

Combined they have introduced consequences, risks and uncertainties on a scale not experienced before in modern history.

The pandemic has raised and will continue to raise questions such as: what will be the long-term impact of the once unimaginable scale of monetary and fiscal support measures being dispensed globally? How many of the changes in behaviour witnessed in response to the pandemic will be permanent? And what do these changes mean for a wide range of industries and services, including those that our portfolio companies operate in? These are just some of the questions that need to be answered before any statements about the outlook can be made with any degree of confidence.

Answers to many of these questions remain highly uncertain and will likely remain so, for at least the remainder of the Company's financial year. Despite the current environment, it is promising that the Company's portfolio across all share classes has, to date, not required further capital investment to trade. The Company's Venture Fund diversified portfolio of investments has started to show signs of improving performance, with some sectors recovering faster than others. Across the Company's A and B Share Classes investments have been less or minimally impacted due to the contractual nature of their revenues.

Given the pressures on revenues, cash flow and profits, a number of companies both in the UK and globally have already announced that they will be suspending dividend payments this year, and we expect more to follow. Despite this and the current economic outlook, over the period the Company has paid dividends of 6.75 pence per share for its A Shareholders, 5.00 pence per share for B Shareholders and the first 3.00 pence per share for Venture Shareholders.

Further information on the investment portfolio can be found below and in the Investment Manager's review on pages 14.

Offer for Subscription

The recent Offer for Subscription of Venture Shares closed on 31 July 2020. The Board are pleased to announce the total raised was £5.8 million and resulted in the issuance of 5,853,393 new Venture Shares. On behalf of the Board, I would like to welcome all new Shareholders and to also thank the existing Shareholders for their continued support.

Since the successful original offers, the Company, under a new top-up offer for the Venture Fund, are seeking to raise a further £10 million (with a £10 million over-allotment facility) in order to continue investing in early-stage businesses with strong, long-term growth potential. The offer for subscription opened on 14 September 2020, subject to Shareholder approval, and will close on 30 July 2021.

Investment Portfolio

The Company's funds at 31 August 2020 were 86% invested in a portfolio of VCT qualifying and non-qualifying unquoted investments. It continues to meet the condition that 80% of relevant funds must be invested in qualifying investments.

Since April 2019, the Venture Fund has deployed £5.8million into 14 qualifying investments. Our latest investment, Veremark, closed in July 2020, taking deployment in the Share Class to over 50%. The A and B Share Classes remain fully deployed and the focus remains on achieving operational efficiencies where possible.

Regulation

Legislation introduced through the Finance Act 2018 began to apply to the Company from 1 March 2020, implementing an increase in the qualifying investment test to 80%. The Investment Manager continues to monitor this ratio closely and the Board are pleased that the Company comfortably navigated the transition period and continues to meet the new requirements.

In line with HMRC guidance, any new investments made by the Company are now self-assured by the Board and the Investment Manager on a case-by-case basis and always with confirmation from professional legal advisers that they are Qualifying Investments. Advance assurance is sought where there is an element of uncertainty or doubt over the application of the rules.

The Company continued to satisfy all other tests relevant to its status as a Venture Capital Trust.

A Share Class

The A Share Class has recorded a small profit over the period of 0.76 pence per share and as at 31 August 2020 the NAV per share stood at 51.79 pence per share. I am pleased to say we are achieving our target for the A Share Class. Following payment of the most recent 6.75 pence per share dividend, A Shareholders have now received an amount of 100 pence per share, including the initial tax relief.

Total return for the A Share Class, which consists of the net assets plus dividends paid to investors since launch, currently stands at 121.79 pence per share.

Short-term power prices have seen extreme volatility as a result of the COVID-19 pandemic and associated lockdown. The A Share Class investment have been somewhat insulated from this volatility as the majority of revenues are generated from renewable incentive schemes. As a result, the valuations have been minimally affected.

The A Share Class is now focused on achieving operational efficiencies across the six hydroelectric schemes. Looking forward, the Company is now targeting an ongoing dividend of around 3.50 pence per annum, which is targeted for a further nine years. This represents a yield of 6.76% pa on the present net asset value.

The Board continue to monitor investment activity across the wider hydro sector and would, if thought appropriate, explore an asset sale to realise further value for investors.

B Share Class

The B Share Class has qualifying investments in two companies that have each constructed a gas fired energy centre. Both energy centres have now been successfully commissioned and are fully operational.

The B Share Class has recorded a small loss over the period of 0.64 pence per share due to running costs of the Share Class exceeding income. At 31 August 2020 the NAV per share stood at 97.13 pence per share. On 30 June 2020, the B Class Shareholders were paid their second 5.00 pence per share dividend totalling £341,213, in line with the target for this Share Class.

Total Return for the B Share Class, which consists of the net assets plus dividends paid to investors since launch currently stands at 107.13 pence per share.

As highlighted above, COVID-19 has brought extreme volatility in energy markets and resulted in reduced electricity prices which have weighed on total revenues across the B Share Class portfolio companies. In contrast the corresponding reduction in gas prices alongside fixed embedded benefits rates has caused the gross spark spread to widen across these assets, resulting in a higher gross margin for the companies. In addition, both companies have been running significantly higher volumes than expected outside of the red band peak hours (4pm - 7pm), again enabling the sites to capture additional revenues.

Venture Fund

The Venture Fund made a loss during the period of 5.71 pence per share. The loss was a result of the provision previously announced in late March 2020 for an anticipated reduction in the valuation of the investments held as a result of COVID-19. The Investment Manager, with input from the Board, has spent considerable time assessing the impact of COVID-19 and the associated recession on the Venture Fund portfolio.

The Venture Fund has benefited from being relatively young coming into this period of economic shock, having both a significant cash weighting and a younger portfolio of investments. The companies in the Venture Fund's portfolio who have raised capital relatively recently, tend to still have sufficient cash balances. The average cash runway across the portfolio is approximately 11 months.

Some businesses have in fact benefited from the change in societal dynamics in recent months, including for example HeyDoc Limited, where their health sector software includes easy facilitation of video calls for medics which has boosted its popularity. But for most companies, in line with the economy overall, social-distancing and the associated recent economic contraction has made it harder to achieve sales targets. Thus, after a careful review of the portfolio, Triple Point and the Board decided to action a c.5% NAV provision in late March 2020, to reflect the potential negative impact on some investee companies.

The Board and the Investment Manager are not aware of any developments since then which would prompt them to alter valuations. More information on recent investments can be found in the Investment Manager's review.

The second Venture Fund offer for subscription closed on 31 July 2020 having raised £5.8 million. The level of investment opportunity during the period continues to be promising. The Investment Management team began investing the proceeds from the initial offer in April 2019 and by the end of August 2020 had completed 14 qualifying investments.

By the end of August 2020, 80% of the Venture Fund's 2019 raise had been invested, and the whole share class is currently just over 50% invested. Investments include eight Software-as-a-Service businesses spanning across the Fintech, Healthcare, Logistics, HR Tech, Training and Real Time Data sectors. The remaining investments are also software-based, with one having developed a platform for the digital delivery and analysis of high-volume corporate SMS messaging and two others exploiting open banking regulations to provide a disruptive new online payments system and a new, more accurate, credit checking system.

We have a full pipeline of new investments for the next six months including three further investments already under heads-of-terms and in the process of deal execution. More detail on these investments can be found in the Investment Manager's Review.

The Venture Fund has already had its first exit with Adepto, the HR Tech business, being acquired by Degreed, a larger Californian player in the same sector. The exit came a little earlier than the Company would ideally have liked to see, given how fast Adepto was growing, but the exit is an early validation of the team's investment selection process and the Fund now benefits from a position in Degreed's own equity.

As highlighted above, the new offer for subscription will continue to target significant capital growth by investing in early-stage innovative companies with an indication or firm commitment from a corporate providing market validation.

These companies will continue to be sourced from the Investment Manager's venture network and have the potential to deliver ground-breaking technology or products, at scale, and to transform markets.

For investments in the 2020/21 tax year, the Offer will remain open until no later than noon on Monday 5 April 2021 subject to cleared funds. For all investments in the 2021/22 tax year, the Offer will remain open until 30 July 2021, unless fully subscribed at an earlier date.

Outlook

The speed and extent to which COVID-19 has changed daily life is hard to overstate. Whilst the first wave of the pandemic appears to be behind us and movement restrictions are being clarified, uncertainty remains, particularly in the short term. We do not yet know how quickly economies can recover or for how long governments can run up such enormous deficits.

In this context, the Venture Fund has substantial resources with which it can continue to prudently undertake new investment opportunities. Although the short to medium-term economic outlook in the UK might be challenging, the Company through its Venture Fund, having liquidity to invest in those businesses operating in innovative ways in sectors where there is future growth, is itself a good opportunity. The Venture Fund is positioned well to capitalise on this. Whilst the investment and conversion process of opportunity through to investment is currently a little slower than was previously the case before COVID-19 the Company is extremely well placed to take advantage of these opportunities as they arise. The Board, the Investment Manager and the Triple Point Venture Network will continue to assess, balance, and diversify the risks within the Venture Share Class.

The Investment Manager announced the launch of a new investment campaign, which was designed to bolster the support of innovative early stage businesses in the UK. The Triple Point Kick-Start campaign targets very early stage businesses that have yet to raise funding. It invests with ticket sizes of between £100k-£150k, in companies with pre-money valuations of between £1m-£1.5m, usually as the first external money into a business. As part of the campaign, Triple Point is committed to providing founding teams with an investment decision within 10 days of applying. As a result of the campaign the Venture Fund has already invested in two businesses. We hope to continue growing the Venture Fund with a third offer for subscription which, subject to shareholder approval at a General Meeting on 19 October 2020 was open from 14 September 2020.

In June 2019, the UK parliament adopted a net zero emissions target for 2050, going further than previous legislation, which mandated 80% emission reductions by 2050. Decarbonisation of the electricity sector, primarily through renewable generation, will be critical to achieving this. The Company continues to support this target through its A and B Share Class investments in hydroelectricity and gas fired energy centres. The UK still experiences significant peaks and troughs in energy consumption, gas fired energy centres help to solve these short-term peaks in the electricity demand profile. Natural gas neatly bridges the gap between environmentally unfriendly fossil fuels and more irregular solar and wind power.

The Board and Investment Manager continue to monitor and discuss the possible impact of Brexit on the underlying portfolio to identify the principal areas of risk. We are continuing to monitor the ongoing Brexit negotiations and will take mitigating action where possible as and when required.

If you have any questions about your investment, please do not hesitate to contact Triple Point on 020 7201 8990.

Jane Owen

Chairman

12 October 2020

Investment Manager's Review

Sector Analysis

During the period there have been changes to the Unquoted Investment Portfolio. The Venture Fund has made investments into four companies, examples of which can be seen on page 19 of the Investment Manager's Review.

The Unquoted Investment Portfolio can be analysed as follows:

* Other SME funding includes £495,000 of Venture Fund investment into a UK-based company which provides finance to small and medium-sized enterprises.

We have the pleasure in presenting our interim review for the six months ended 31 August 2020.

Review & Future Developments

In the six months that this Interim Report covers we have been confronted with rapidly changing data related to the social, political and increasingly financial impact of the response to the COVID-19 virus. The onset of significant travel restrictions and other social distancing measures, in the United Kingdom and across over 80% of the world's population, in response to managing the public health fallout from the disease, will have serious consequences for economic and financial conditions. Particularly if secondary waves of the virus force further lockdowns until a vaccine becomes widely available. In terms of policy response, we have seen significant fiscal and monetary stimulus across many geographies in the form of interest rate reductions and a ramp up of fiscal stimulus, with a focus on both mitigation of short-term challenges for business and a boost to long-term infrastructure investment with the promise of more intervention if needed to further stimulate activity.

It was start-ups raising money for the first time that were hit the hardest by the drop in venture capital funding according to the latest research by the start-up specialists Plexal and Beauhurst. "By only backing companies that have already raised funds, investors are ignoring the very companies that will define the future success of the British economy." 

This is exactly why Triple Point has launched the Kick Start campaign in which we look to bolster the support of innovative early stage businesses in the UK and, in so doing, find great opportunities for our investors.Kick Start

We at Triple Point hope to have a hand in this recovery and in partnership with the London Evening Standard launched the Kick Start Campaign with the aim of supporting innovative early stage businesses in the UK. The partnership is designed to back the entrepreneurs and innovators of the future. A consequence of COVID-19 has been that it has helped to lower the cost of starting a business, due to cheaper office rents and advertising rates, creating huge opportunities for start-up businesses.

Through Kick Start, Triple Point targets early stage businesses that have yet to raise funding. We invest with ticket sizes of between £100k-£150k in companies with pre-money valuations of between £1m-£1.5m, usually as the first external money into a business. The goal is to provide founding teams with an investment decision within 10 business days of applying, making cash available within 21 days.

Energy Investments - Active Asset Management

Both the A and B Share Class remain fully invested across companies in the hydroelectric power sector and the gas power sector. Despite the ongoing pandemic and the change in electricity demand profile, investments across both share classes continue to generate electricity.

The companies across the A and B Share Classes have been minimally affected by the COVID-19 pandemic, there have been minimal supply chain disruptions leading to no substantial delays in the sourcing of any key components for either the hydroelectric or gas fired energy projects. Triple Point continue to liaise with our Operation and Maintenance contractors across all companies to try and avert any potential future delays in the procurement process.

Triple Point continue to work actively to both increase the value of the Company's A and B Share Class portfolio through operational improvements in the underlying assets and to protect value where market conditions have deteriorated, this is best illustrated by fixing power prices in the near term. Other areas where hands-on asset management delivers additional shareholder value is in relation to the negotiation of major commercial contracts including the power purchase agreements for each individual site and operation and maintenance agreements.

Triple Point continue to seek to reduce operating costs on a project by project basis by, for example, successfully appealing business rates assessments which has delivered significant savings for investee companies.

A Share Class

The A Share Class has investments in five hydroelectric companies which between them own six hydroelectric schemes in the Scottish Highlands. All six schemes have been commissioned and are operational.

The primary means of optimising revenue from, and hence capital value of hydroelectric assets is to ensure the plant is kept available to generate electricity and to increase the revenue per unit generated. The highest levels of electricity generation can be achieved by proactive management of the operation and maintenance providers by managing planned downtime and ensuring that unplanned downtime is kept to a minimum.

During the period to 31 August 2020, the hydroelectric companies generated 3,537 MWh of electricity. Based on an average of 3.8 MWh annual use per household, the companies generated enough electricity for 930 homes during the period.

The A Share Class paid a 6.75 pence per share dividend to shareholders on 30 June 2020. This dividend payment takes total dividends paid to A Shareholders to 70 pence per share. Including the 30% initial tax relief, investors have now received 100 pence per share. This is a very good result for Shareholders and means the Company has achieved its initial target which was set at launch.

B Share Class

The B Share Class remains fully invested with two Qualifying Investments in companies operating gas fired energy centres. Both energy centres were commissioned back in May 2018 and consist of containerised gas combustion engines that generate electricity for onward sale, especially at times when there is high demand for power. 

As highlighted in the Annual Report, Ofgem continues to conduct its review into system charges such as generator distribution use of system charges or "GDUOS" and "Network Access and Forward-Looking charges". Depending on the outcome this may impact the embedded benefits that small generators such as the B Share Class portfolio companies receive. Whilst Ofgem has released further information on the shortlist of options it is considering as part of this review, it is currently unclear what the outcome of this review will be, and as such no changes have been made to the companies' forecast cash flows regarding this review - but there remains a risk that this income stream may be reduced in the future if the outcome of the review results in a reduction in these embedded benefits. Ofgem is expected to present its draft decision on reform of these charges later in 2020.

In June 2019, the UK Government became the first major economy in the world to pass laws to end its contribution to global warming by 2050.The target will require the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels.

As a result of this, the UK is aiming to close its coal-fired power plants by 2025, and it is therefore expected that there will be increased pressure on the supply of energy in the UK during periods of peak demand. Although renewable energy makes an increasing contribution, the irregular nature of its production means that other baseload sources will also be required to help make up the deficit.

Both qualifying companies are fully operational. During the period to 31 August 2020, Green Peak Generation Limited generated 10,086 MWh of electricity, and Distributed Generators Limited generated 6,378 MWh of electricity. Based on an average of 3.8 MWh annual use per household, the energy centres generated enough electricity for 2,654 and 1,678 homes respectively during the period.

As the B Share Class begins to reach the end of its five year holding period, the Investment Manager is beginning to consider the future of the assets held by the B Share Class, and how it can realise maximum value for Shareholders.

Venture Fund

The Venture Fund was initially launched in September 2018 and closed on 30 August 2019 having raised £6.91 million net of all costs. Its second offer closed on 31 July 2020 after raising an additional £5.8 million, a third offer opened, subject to Shareholder approval, on 14 September 2020, looking to raise £10 million with an over-allotment facility for a further £10 million.

The Triple Point team began investing the fund in April 2019 and as at 31 August 2020 have completed 14 investments. Investments include eight Software-as-a-Service businesses spanning across the Fintech, Healthcare, Logistics, HR Tech, Training and Real Time Data sectors. The remaining investments are also software-based, with one having developed a platform for the digital delivery and analysis of high-volume corporate SMS messaging and two others exploiting open banking regulations to provide a disruptive new online payments system and a new, more accurate, credit checking system.

We have a healthy pipeline of new investments for the next six months including three further investments already under heads-of-terms and in the process of deal execution.

The Venture Fund will continue to focus on business-to-business investment opportunities using a challenge-led approach. Businesses targeted by the Venture Fund will have the potential to generate long-term capital growth for investors. Over time, realised capital gains are expected to contribute to the payment of dividends by the VCT along with growing the Net Asset Value.

In the year to February 2020, the Venture Fund acquired a non-qualifying investment in an LLP which provides financing to SMEs. The intention of this acquisition was to enable the Venture Fund to generate a modest income for the fund to help enable the Share Class to service costs.

The total deployed by the Venture fund to date, including both qualifying and non-qualifying investments, is £5.86 million. The balance of the Share Class's assets are held in cash and cash deposits.

During the period, the Venture Fund made four qualifying investments at a total cost of £1.3 million. The Company's investments in Artificial Artists and Veremark came through the Kick Start scheme.

Credit Kudos - is a new wave Credit Reference Agency ("CRA") that utilises financial data obtained via Open Banking application programming interfaces ("APIs"). This behavioural data allows consumer lenders to make better and faster credit decisions rather than relying on the backward-looking data of the incumbent CRAs.

Localz - provides location, workflow and communications technology to companies with large mobile workforces such as home delivery and boiler maintenance companies. The software facilitates real-time visibility of field technicians / deliveries and offers an Uber/Deliveroo style experience for the end consumer, whilst also saving significant operating costs for the client.

Veremark - has created a process that automates the workflow of the collection of reference checking, criminal records, educational grades, etc. The problem it addresses is that most companies (especially regulated businesses) need to perform background checks on any staff that they hire before they start. Current providers rely on manual time-consuming processes - resulting in a slow and often poor customer experience. Veremark offers a quicker turnaround time and better experience but at the same market price.

Artificial Artists - simplifies 3D animation to help brands better engage and connect with their audiences. Their cloud based virtual production studio, 3dctrl, empowers artists to create engaging, dynamic and professional quality 3D animation for digital advertising, social media and e-commerce. 

Outlook

As the UK begins to emerge from lockdown, prospects seem particularly unclear. Several of the attributes that have made the UK an attractive economy in which to invest seem under threat. The government is exerting greater influence on the corporate sector and rules are being set informally without clear legislation. COVID-19 is a different type of risk compared with others we have experienced in recent years.

The reaction to the pandemic has served as a reminder, that where people and businesses come together - their combined efforts, through society and collaboration, can excel. The advances in the understanding of COVID-19 and the effective measures to control its spread in just a handful of months, although being very costly to the economy, demonstrates human adaptability and ingenuity.

It is this adaptability and ingenuity which we are seeking, when looking to make investments through our Venture Fund.

We believe that by investing carefully, monitoring our portfolio rigorously and providing support to the businesses in which we have invested, we can minimise the effects of the current political and economic uncertainty.

If you have any questions, please do not hesitate to call us on 020 7201 8990

Ian McLennan

Partner

For Triple Point Investment Management LLP

12 October 2020

Investment Portfolio Summary

Principal Risks and Uncertainties

Principal Risks and Uncertainties

The Directors seek to mitigate its principal risks by regularly reviewing performance and monitoring progress and compliance. In the mitigation and management of these risks, the Directors carry out a robust assessment of the Company's emerging and principal risks, including those that would threaten its business model, future performance, solvency or liquidity and reputation.

The main areas of risk identified by them, along with the risks to which the Company is exposed through its operational and investing activities, are detailed below.

VCT Qualifying Status Risk the Company is required at all times to observe the conditions laid down in the Income Tax Act 2007 for the maintenance of approved VCT status. The loss of such approval could lead to the Company losing its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the Company and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment.

Mitigation: The Investment Manager keeps the Company's VCT qualifying status under continual review and reports to the Board on a quarterly basis. The Board has also appointed Philip Hare & Associates LLP to undertake an independent VCT status monitoring role.

Investment Risk the Company's VCT qualifying investments will be held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. This could make it difficult to realise investments in line with the relevant strategy.

Mitigation: The Directors and Investment Manager aim to limit the risk attached to the portfolio as a whole by careful selection and timely realisation of investments, by carrying out rigorous due diligence procedures and by maintaining a spread of holdings in terms of industry sector and geographical location. The Board reviews the investment portfolio with the Investment Manager on a regular basis.

Financial Risk as a VCT the Company is exposed to market price risk, credit risk, fair value risk, liquidity risk and interest rate risk. As most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid, the Directors consider that it is inappropriate to finance the Company's activities through borrowing, other than for short-term liquidity.

Mitigation: The Company's approach to managing its financial risks is set out in more detail in the annual report which is available on the Company's website.

Failure of Internal Controls Risk the Board regularly reviews the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.

Mitigation: The Board maintains a risk register which sets out the risks affecting both the Company and the investee companies in which the Company is invested. This risk register is reviewed and updated at least annually to ensure that procedures are in place to identify the principal risks which may affect the Company and its portfolio companies, mitigate and minimise the impact of those risks should they crystallise and to identify emerging risks and to determine whether any actions are required. This enables the Board to carry out a robust assessment of the risks facing the Group, including those risks that would threaten its business model, future performance, solvency or liquidity and reputation.

Emerging Risks

Investee Companies

The risks of Brexit and COVID-19 are relevant to not just the Company, but also the companies of which we invest.

The risks to the portfolio companies are discussed in more detail in the Investment Manager's Review on pages 14 to 20.

Coronavirus

Following the outbreak of COVID-19 across the globe and in the UK, the Company is navigating both volatile and uncertain times. It is likely that the economic turmoil caused will certainly continue in the near term, and likely the medium term. In a more challenging and unstable financial environment, start-ups, like many of our Venture Fund Portfolio companies, typically burn less cash, so they will therefore grow less quickly. Slower growth may mean slower appreciation in company value.

As ever, with venture capital investing we are maintaining a long-term investment time horizon. We are confident that thus far we have backed outstanding founders running good quality businesses that will continue to grow over the longer term.

Due to the unprecedented situation, the progress and outcome of the current COVID-19 pandemic remains uncertain.

The impact of COVID-19 is discussed at length in both the Chairman's Statement on pages 6 to 12 and the Investment Manager's Review on pages 14 to 20.

Brexit

Following the United Kingdom's withdrawal from the EU on 31 January 2020, the Investment Manager and the Board continue to keep the impact of Brexit on the Company under review. The current economic outlook and potential impact from Brexit is relatively unknown as the terms of the UK's exit have not been finalised with the EU. Any potential impact of the UK's withdrawal is difficult to quantify.

The Company's strategy of investing in small UK-based businesses, however, means that it is unlikely to be directly exposed to the terms of any future deals negotiated with the EU. We are, however, going through a period of some political and economic uncertainty.

We believe that by investing carefully, monitoring our portfolio rigorously and providing support to the businesses in which we have invested, we can minimise the effects of this uncertainty.

Directors' Responsibility Statement

The Directors have elected to prepare the Interim Report for the Company in accordance with International Financial Reporting Standards ("IFRS").

In preparing the Interim Report for the six month period to 31 August 2020, the Directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union and that the Chairman's Statement on pages 6 to 12 includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Conduct Authority namely:

a) the Interim Financial Report includes a fair review of important events during the period and their effect on the Financial Statements and a description of specific risks and uncertainties for the remainder of the accounting period;

b) the Interim Financial Report gives a true and fair view in accordance with IFRS of the assets, liabilities, financial position and of the results of the Company for the period and complies with IFRS and the Companies Act 2006;

c) the Interim Financial Report includes a fair review of related party transactions and changes therein. There were no related party transactions for the accounting period; and

d) the Directors believe that the Company has sufficient financial resources to manage its business risks in the current uncertain economic outlook.

This Interim Financial Report has not been audited or reviewed by the auditors.

Jane Owen

Chairman

12 October 2020

Unaudited Statement of Comprehensive Income

For the six months ended 31 August 2020

The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP). All revenue and capital items in the above statement derive from continuing operations. This Statement of Comprehensive Income includes all recognised gains and losses. The accompanying notes are an integral part of this statement.

Unaudited Balance Sheet

At 31 August 2020

Company No: 07324448

The statements were approved by the Directors and authorised for issue on 12 October 2020 and are signed on their behalf by:

Jane Owen

Chairman

12 October 2020

The accompanying notes are an integral part of this statement.

Unaudited Statement of Changes in Shareholders' Equity

For the six months ended 31 August 2020

The capital reserve represents the proportion of Investment Management fees charged against capital and realised/unrealised gains or losses on the disposal/revaluation of investments. The unrealised capital reserve is not distributable. The special distributable reserve was created on court cancellation of the share premium account. The revenue reserve, realised capital reserve and special distributable reserve are distributable by way of dividend.

At 31 August 2020 the total reserves available for distribution are £2,697,000. This consists of the distributable revenue reserve and special distributable reserve net of the realised capital loss.

Unaudited Statement of Cash Flows

For the six months ended 31 August 2020

The accompanying notes are an integral part of this statement.

Non-Statutory Analysis - The A Share Fund

For the six months ended 31 August 2020